GM Wants to Take on Fiat 500 With ‘Masculine’ Opel Adam

By Tim Higgins and Craig Trudell -
Sep 27, 2012

General Motors Co. (GM), in a bid to take on the Fiat 500, is betting that a “masculine” small car called Adam will help restore interest in the Opel brand as the automaker struggles to stem losses in Europe.

“It’s different looking, it’s modern, it’s young,” GM Vice Chairman Steve Girksy told analysts earlier this year. Adam “could do more for Opel’s image than any other product they’ve launched in a long time. It’s not the giant moneymaker, but it could be a high-volume car with good image.”

GM lost $361 million in Europe before interest and taxes in the second quarter bringing total losses in the region to $16.8 billion since 1999. Chief Executive Officer Dan Akerson installed Girksy as interim president of GM Europe in July to end deficits in the region.

The automaker, based in Detroit, has said it wants to close a factory in Germany, along with other cost-saving measures. GM must also generate more revenue, Girsky has said.

“The objective for this car is not only to reach a new target customer, enter a new segment and to obviously get the sales potential from that, but also to reinvent the Opel and Vauxhall brands,” Katie Purcell, product marketing manager for the Opel Adam, said in a telephone interview this month.

The Adam, which begins arriving in stores early next year, will have a starting price of 11,500 euros ($14,812), GM said in a statement today. Fiat SpA (F)’s 500 has a starting price of 11,850 euros in Italy before discounts.

‘More Bold’

The car will have three trim levels and pricing will be disclosed today at the Paris Motor Show, Purcell said at a presentation in Paris yesterday.

“We think of the Fiat as a little bit more of a feminine design, a little bit cuter -- a cute design, whereas Adam is definitely more bold, more masculine,” Liz Wetzel, GM Europe design director, said in a telephone interview.

Girsky’s efforts to fix GM’s operations in Europe, including Opel, come as the region’s market worsens. The European car market has shrunk for 11 consecutive months as governments grapple with a sovereign-debt crisis. The European Automobile Manufacturers’ Association is forecasting a 17-year low for full-year sales. GM’s European sales, including Opel, its U.K. sister brand Vauxhall and the Chevrolet marque, fell 12 percent this year through August.

After negotiating new labor agreements with workers in the U.K. to improve productivity, GM is now in talks with unions about closing a plant in Bochum, Germany. If successful, the Bochum plant would be the first car factory to shut down in Germany since World War II.

GM this year formed an alliance with Paris-based PSA Peugeot Citroen (UG) that includes purchasing and vehicle development.

Analysts’ Doubts

While the Adam is a “neat little product,” it won’t be the vehicle that turns around the brand, Matthew Stover, an analyst with Guggenheim Securities LLC in Boston, said in a telephone interview.

“This is 80,000 units in a market where they sell just under a million units in” eastern Europe, he said. “It’s important but is it the most important thing? Not really.”

Adam Jonas, an auto analyst for Morgan Stanley, said in a Sept. 6 note that shedding Opel would be best for GM.

“Losses over the next 12 years could be even greater” than $16 billion, Jonas wrote as the note’s lead author. “The unit represents the single biggest threat to GM’s long term financial health and sustainability.”

‘Independent Thinking’

The Opel Adam this week, has a list of quirky options, such as tiny lights that illuminate the vehicle’s interior roof like the night’s stars. Such lights are often found only in larger, more expensive models. The interior and exterior can be customized in many different ways. There are about 30,000 possibilities for the exterior, Opel said.

“The target we’re aiming for are people who are very independent thinking,” Wetzel said. “They want to make their own personal statement with their vehicles and with the Adam we’re really enabling them to make the car that they want, exactly the way they want it.”